Procurement QOTW – SMEs and eSourcing

Well, we had another great response to our question of the week, which to remind you was this;

What are the barriers that smaller firms face in winning contracts with large private and public sector organisations? And in particular, is greater automation of the sourcing process helping or hindering small suppliers?

We had some very lengthy and interesting responses; so if this is a topic of interest, please do go back to the original post and read the comments in full.

Most of the comments did relate to the technology side of the question. I will come back to the more general issues around attracting small / minority owned suppliers more generally at some point, but we'll focus here mainly on the technology aspect.  And opinions split about whether technology was helping or hindering SMEs.  On the less positive side, Colin Maund of Achilles was unsure SMEs would benefit;

There is an assumption by governments that posting electronic “calls for competition” will make bidding fairer and open the door for more SME involvement. In fact the reverse may be true; the amount of data on these sites means that SMEs are bombarded with information and only large companies can afford to have specialists who keep looking at and responding to tender opportunities.

Christine Morton as a public sector practitioner pointed out a few issues with PQQs – to be fair, these tend apply to paper or electronic sourcing, but are serious issues for SMEs in either case:

There is a problem about the question on PQQs about the percentage that the possible new business relates to annual turnover. If this is above a threshold, for example, perhaps there should be an option for the responder to put in how the impact of winning the new business would affect their business expansion plans…. we often ask on PQQs for listings of the other government customers of that potential supplier. If we’re always relying on those who have done it before, how are we to encourage new entrants into the market?  Lastly, the PQQ process is extremely onerous on all suppliers, not just small ones. I recently had a supplier complain to me that they had a library of 50 different Health and Safety method statements, each suiting a different tendering style. And as much as we go on about standardising PQQs, I’ve had many people say that once legal gets involved they want something different …

Flo had some horror stories based on personal experience.

Some of the systems, where the potential provider has to enter everything on screen (and in the case where I gave up, you couldn’t even ‘cut and paste’ in your answers) are far from friendly.

Even large firms struggle in some cases, she pointed out. And automatic marking has issues – for instance, where the option is ‘yes’ or ‘no’ but really you would like to explain more than this! Do you lie to make the cut; or be honest and risk exclusion?

Market Dojo highlighted the difficulty of being alerted to opportunities in the first place as an SME, but then  came at things from a non-technology related angle, pointing out that how the contract was structured could be the main factor working against SMEs.

An organisation may decide to have a national supplier for say, lawn mowing services, which then greatly narrows down the list of candidates to the large businesses capable of such coverage. Instead, such contracts could be broken down into constituent ‘lots’ with the SMEs vying for particular regions and competing with the large outfits.

(See our French post later today!) But he does believe that overall, from his experience,  e-tendering does save time and is easier for participants to respond to. And I did like his parting advice to bidders;  although the process is automatic, don’t let your response be robotic.

Jonathan Betts (Science Warehouse) was another who stressed that the process should not stop you marketing yourself as an SME.  He doesn’t believe that the ‘procurement channel’ matters too much; but

The success of a business in winning contracts inevitably correlates with the level of marketing investment.

Garry Mansell (TradeExtensions) was entertaining as ever; remembering the early days of eProcurement when bidders would say, "IT department? Well Darren works at Curry’s and he comes in on Saturdays to look after our PC’s”.

But he believes that eSourcing levels the playing field for smaller suppliers and can be an advantage. And he points out that more sophisticated sourcing approaches (such as optimisation) give ‘agile’ suppliers an advantage, whatever size they are.  However, picking up on Jonathan’s point about the importance of marketing, he also confirms that;

The biggest problem they seem to have is still simply being invited to the tender. That’s where the point about a marketing budget is very astute, you have to be known in order to be invited to “play”, and your sales force has to be well motivated and trained.

Finally, Richard Hogg of BravoSolution summed it up very well – and I think this is pretty much my view;

I think electronic tendering / sourcing benefits small suppliers because the automation provides ease of use, a defined process and reduced effort. As a result, purchasing organisations (public/private) can be more inclusive while reducing the overall sourcing cycle. However, automation is only a canvas with which sourcing managers define their process and the success of automation is largely dependent on the contracting authorities ‘skill’ in using the automated solution.

He goes on to say that his firm, as a provider of sourcing solutions, has had to provide in a bid,multi-year and audited evidence of H&S accident rates and corrective measures (server dropped on foot anyone?)”

There’s a lot more interesting thinking from Richard; but I think summarising his and all the contributions, the strongest message would be;

A bad buyer will run a bad process, electronic or automated, and SMEs will usefully suffer the most.  A good buyer can use automation positively, and it can then be a benefit for SMEs.

First Voice

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